Three South Korean firms to plead guilty to rigging price of U.S. military base fuel: Justice Department

WASHINGTON (Reuters) – Three South Korean companies will plead guilty to criminal charges and pay $236 million for their role in a conspiracy to fix the price of fuel sold to U.S. military bases in South Korea, the Justice Department said on Wednesday.

The U.S. Department of Justice building is seen in Washington, U.S., February 1, 2018. REUTERS/Jim Bourg

SK Energy Co Ltd [SKENGG.UL]; GS Caltex Corp [GSCAL.UL], 50 percent owned by Chevron; and Hanjin Transportation Co Ltd agreed to pay $154 million in civil damages to the United States and $82 million in criminal fines, the department said.

The settlement was part of a larger investigation involving other companies, the head of the Justice Department’s antitrust division, Assistant Attorney General Makan Delrahim, told reporters.

The three “and other co-conspirators rigged bids and fixed prices for fuel supply contracts issued by the U.S. military in this strategically critical region for over a decade,” Delrahim said.

The conspiracy began around March 2005 and continued until 2016, with South Korean petroleum and refinery companies and their agents working to suppress competition during the bidding process for U.S. military fuel contracts, the department said.

“As a result of the anti-competitive agreement, the U.S. Department of Defense paid substantially more for fuel supply services than it would have absent the collusion,” Delrahim said.

SK Innovation, owner of SK Energy, said in a regulatory filing on Thursday that SK Energy had been investigated by the U.S. Department of Justice for price rigging. It “reached an agreement with the Department of Justice to conclude the case in the fourth quarter and pay around 140 billion won ($124 million) in fines and damages,” the filing said.

GS Caltex said in an emailed statement it also “signed and entered into agreements with the United States Department of Justice”, but could not further comment on specific details as the investigation on the case is ongoing.

Chevron spokesman Braden Reddall said the company fully cooperated with authorities in the probe of Caltex. “No Chevron employees were implicated in the case,” he said.

Hanjin representative Seung Bae Lee said the company was “committed to complying with the antitrust and competition laws and values its decades-long relationship with the U.S. military.”

Between criminal fines and other payments, SK Energy is to pay $124.5 million, GS Caltex will pay $104.2 million and Hanjin will pay $7.6 million, according to Justice Department data.

The payments made by the companies “exceeds the amount of the individual overcharge,” the department said.